Blues to ask lawmakers to allow it to become nonprofit, taxpaying mutual insurer

Blue Cross Blue Shield of Michigan will ask state lawmakers to take action soon to pass health insurance market reforms.

The insurance reforms contained in state Senate Bills 1293 and 1294 would regulate all health insurers under consistent guidelines and enable the BCBSM Board of Directors to transition the company to a taxpaying, nonprofit mutual insurer.

These reforms were proposed by Republican Gov. Rick Snyder in September, and eventually gained support of an overwhelming majority of the state Senate and a broad group of business and health organizations.

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However, Snyder vetoed the legislation when, at the last minute, the GOP added a rider which required anyone who might need or want an abortion to buy additional coverage "for an abortion," said gubernatorial spokesman Kurt Weiss on Monday.

"Governor Snyder didn't agree with the more restrictive abortion language," calling it an overreach of government and vetoed the legislation, he added.

"We are disappointed with the veto but understand the governor's decision," said Andrew Hetzel, BCBSM vice president for corporate communications.

"We also understand why he proposed the legislation in the first place. Michigan needs a modern and fair system of regulations for health insurance that encourages competition and expands consumer choice. The governor's proposal is also an unprecedented opportunity to invest billions in creating a healthier future for Michigan's people."

Key provisions of the BCBSM-backed legislation include:

BCBSM will pay taxes, estimated to total $1.8 billion over the next 18 years. This levels the playing field for BCBSM competitors, which have long considered the company's tax exemptions to be a competitive advantage, the Blues said;

BCBSM will remain a nonprofit company, and as an expression of its nonprofit mission, it will contribute $1.56 billion over the next 18 years to a separate and independent nonprofit fund that will invest in programs to improve public health and protect the vulnerable;

BCBSM will provide an estimated $800 million in subsidies for its "Medigap" supplemental insurance plans for Medicare beneficiaries through July 2016 -- freezing rates in those plans at current levels.

BCBSM will be regulated under the same law as its competitors, creating a fair and balanced set of rules for all health insurers in Michigan, according to the Blues.

The legislation also includes provisions sought by Blue Cross' competitors and advocates for older adults for a ban on "most favored nation" clauses in contracts between hospitals and health insurers and language requiring subsidies for Medigap insurance to be provided to low-income seniors by the state's nonprofit fund through 2021.

The proposed legislation also requires the Blues contribute a "fair share" of reimbursement to hospitals to account for underfunded government programs and uncompensated care.